DLTR

Costco trades at 47x earnings with four straight quarters of declining comps, while Five Below grew net sales 23% and comparable sales 14%. Dollar General posted its fifth straight quarter of traffic growth while Dollar Tree expanded gross margin 850 basis points, each trading near 17x earnings. Cramer warned Costco may be losing younger shoppers as digital sign-ups renew at lower rates than warehouse members, suggesting weakening cultural grip. Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Costco didn't make the cut. Enter your email to see the names that beat COST. The report is free. Enter your email and see if any of your stocks made the cut. On CNBC's opening bell on September 3, 2026, Jim Cramer laid out a split that inverts most people's assumptions about American retail. The membership warehouse with the best reputation in the business is stumbling, and the chains people quietly hit for essentials are running away with the story. Costco (NASDAQ:COST) trades near 47 times trailing earnings while its comparable sales have gone the wrong way for four straight reporting periods. Meanwhile, Five Below (NASDAQ:FIVE), Dollar Tree (NASDAQ:DLTR), and Dollar General (NYSE:DG) have each reported quarters that would look strong in any market. Cramer's read is that the trade-down is real, and it is not treating Costco the way loyal shoppers assume it should. Jim Cramer said, "If you want to know what trading down looks like in a positive way, you just look at what Winnie Park has done at Five Below. Still one more amazing quarter." The endorsement lines up with the numbers. Five Below's second quarter delivered net sales of $1.3 billion, up 23%, with comparable sales growth of 14% and adjusted diluted EPS of $1.68. Park raised full-year adjusted EPS guidance to a midpoint of $10.07. Free Report, Just Released Why Didn't COST Make The Top 10 List? 24/7 Wall St has helped investors make money for over two decades, and our top analysts just finished ranking the definitive Top 10 Stocks To Buy Now. Not the ten biggest companies. Not the ten everyone is arguing about. The ten best stocks to buy right now. And COST didn't make the cut! The report is free, and you can see why we think each stock is a top investment today. Enter Your Email and See the Ten → Trading down describes household dollars migrating toward retailers positioned where the marginal purchase now happens. Park emphasized broad-based growth across all income cohorts, geographies, and categories, which reads as trade-in behavior from higher-income shoppers rather than pure distress buying. At roughly 31 times earnings, Five Below is priced for growth investors, and estimate revisions have moved higher across every forward quarter. That is a materially different proposition than paying 47 times for a warehouse chain whose top line is decelerating. Cramer invoked Charlie Munger's principle that at extreme multiples the price has already paid for the future, and then applied it to Costco. He is right, and the multiple is best read as a symptom of the underlying problem. CNBC noted that Costco's comparable store sales declined across May, June, July, and August, and also flagged weak renewal rates for membership card purchases. Management on the last call reported the worldwide renewal rate at 89.7%, attributing the pressure to a growing mix of online sign-ups that renew at lower rates than warehouse sign-ups. A membership retailer that struggles to keep its members has a structural issue that a rebound in gasoline traffic cannot fix. Costco's operating leverage lives in the fees line, and although membership fees ran $1.37 billion, up 10.7% in the most recent quarter, a slower renewal cadence eventually reaches that growth rate. The stock has noticed. Costco is down 2% over the past year and sits below both its 50-day and 200-day moving averages. Jim Cramer said, "I don't want it to be a generational thing where my generation is Costco and the newer generations don't look at it like that." That is the most interesting thing he said, and the evidence is genuinely mixed. Bullish evidence: paid executive memberships grew 9.6% to 41.2 million, digitally enabled comparable sales rose 21.5%, and site and app traffic increased 37%. A brand losing the internet does not produce those numbers. Bearish evidence: digital sign-ups renew at a lower rate than warehouse sign-ups. The new member is easier to acquire and harder to keep, which is the pattern you would expect if the brand's cultural gravity were weakening at the margins. Cramer's fear is reasonable. The data does not yet confirm it. Jim Cramer said, "I'm just wondering whether the great value isn't in these dollar stores." CNBC reported strong results from both Dollar Tree and Dollar General. Dollar Tree posted comparable sales up 3.7% with gross margin expanding 850 basis points to 42.9%. Dollar General reported 3.5% same-store sales growth in its fifth consecutive quarter of traffic growth, and CEO Todd Vasos cited strong trade-in across middle- and high-income cohorts. The economics are simple. When budgets tighten, the fixed-cost base of a small-box discount format levers hard against small increases in traffic, and a $1 price point does disproportionate merchandising work for a shopper counting pennies. Dollar Tree at 16 times earnings and Dollar General at 17 times are priced as if the trade-down ends tomorrow, which it likely will not, unless real wages accelerate meaningfully at the low end. The trade-down winners look like a cyclical opportunity that investors would size to their own risk tolerance. What ends the trade is a genuine improvement in purchasing power at the bottom two income quintiles. Until that shows up in the data, Five Below and the dollar stores are where the incremental household dollar is going. If you have cash sitting in your account right now, give this two minutes. After more than two decades of helping investors beat the market, our top analysts at 24/7 Wall St. put together a definitive report on the Top 10 Stocks To Buy Today. And COST wasn't one of them. They combed the entire market. It's not 10 ideas, not 10 stocks everyone is talking about, it's what their research points to as the 10 best stocks to buy right now, and it's free. Read more here and >;elm:context_link;itc:0;sec:content-canvas" data-yga="{"yLinkElement":"context_link","yModuleName":"content-canvas","yLinkText":"see which stocks made the list -->"}" class="link ">see which stocks made the list -->> Contact [email protected] for any questions or corrections.

With Ollie's Bargain Outlet Holdings, Inc. OLLI set to announce its second-quarter fiscal 2026 earnings results on Sept. 2, before the market opens, investors face a critical question: Can OLLI continue its streak of surprising results, or will challenges temper growth?The Zacks Consensus Estimate for second-quarter revenues is pegged at $757.9 million, implying an 11.5% increase from the year-ago reported figure. Meanwhile, the consensus estimate for earnings has declined by a penny over the past 30 days to $1.14 per share. Nevertheless, the estimate indicates year-over-year earnings growth of 15.2%.Ollie's Bargain has a trailing four-quarter earnings surprise of 4.9%, on average. In the last reported quarter, this Harrisburg, PA-based company surpassed the Zacks Consensus Estimate by 4.6%. Image Source: Zacks Investment Research As investors prepare for Ollie's Bargain’s second-quarter results, the question looms regarding an earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Ollie's Bargain this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Ollie's Bargain has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote Ollie’s Bargain’s second-quarter performance is likely to have benefited from the continued strength of its closeout buying model and an increasingly value-conscious environment. Management entered the quarter with a strong pipeline of merchandise deals, supported by retail industry consolidation and fewer competing buyers for large closeout opportunities. The company also indicated that both the quality and availability of deals remained favorable. This environment should have helped OLLI offer compelling branded merchandise at attractive price points.Building on that value proposition, OLLI’s store expansion and customer-engagement initiatives are also likely to have supported sales. New store growth remained a key priority, while management expressed confidence in its real estate pipeline and continued expansion strategy. At the same time, the company entered the quarter with strong momentum in its Ollie’s Army loyalty program and planned several customer-focused events, including Ollie’s Army Night and Ollie’s Days. An additional flyer event was also moved into the second quarter to capture back-to-school demand. Together, these initiatives are likely to have helped drive customer acquisition.OLLI continued to optimize its merchandise mix by allocating space toward more productive categories and reducing exposure to structurally weaker areas. Management also highlighted ongoing efforts to improve supply-chain productivity, including technology upgrades across its distribution network and capacity investments. Better closeout buying, supply-chain efficiencies and lower shrink were cited as margin-supportive factors, giving the company room to invest in price. However, the quarter was not without headwinds. Cautious discretionary spending, pressure on household budgets and elevated fuel costs may have weighed on customer traffic and shopping frequency. The second quarter also lacked the potential support from higher tax refunds. Ollie's Bargain, which competes with Grocery Outlet Holding Corp. GO and Dollar Tree, Inc. DLTR, has seen its share price decline 4.8% over the past three months against the industry’s rise of 6.1%. While shares of Grocery Outlet have rallied 41.1%, Dollar Tree has jumped 15.7% in the aforementioned period. Image Source: Zacks Investment Research Ollie’s Bargain’s valuation remains attractive relative to the industry. OLLI currently trades at a forward 12-month price-to-sales (P/S) multiple of 1.44, representing a notable discount to the industry average of 2.29. The stock is also trading well below its 12-month median P/S multiple of 2.17, suggesting a relatively inexpensive valuation compared with its recent historical levels. However, OLLI commands a premium to some of its close peers. Grocery Outlet trades at a forward 12-month P/S multiple of 0.25, while Dollar Tree carries a multiple of 1.11. Image Source: Zacks Investment Research Ollie’s Bargain enters the second-quarter earnings release with a favorable closeout environment, store expansion, loyalty-driven customer engagement, and ongoing merchandising and supply-chain improvements. However, pressure on discretionary spending and elevated fuel costs are concerns, while the current earnings setup does not provide a strong signal for a positive surprise. Although the stock’s discounted valuation offers some support, that alone may not be enough to offset the risks. Given the mixed backdrop and limited visibility into an earnings beat, prospective investors may be better off waiting for greater clarity from the upcoming results, while existing shareholders should remain cautious and closely watch sales trends, consumer behavior and management’s outlook before making fresh investment decisions. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Aug. 27, 2026 at 8:00 a.m. ET Senior Vice President, Investor Relations and Treasurer - Daniel Delrosario Chief Executive Officer - Mike Creedon Chief Financial Officer - Stewart Glendinning Operator: Greetings, and welcome to the Dollar Tree Q2 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Daniel Delrosario, Senior Vice President, Investor Relations and Treasurer. Daniel, please go ahead. Daniel Delrosario: Thank you, operator. Good morning, everyone, and thank you for joining us today to discuss Dollar Tree's second quarter fiscal 2026 results. With me today are Dollar Tree's CEO, Mike Creedon; and CFO, Stewart Glendinning. Before we begin, I would like to remind everyone that some of the remarks that we will make today about the company's expectations, plans and future prospects are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated by our forward-looking statements. For information on the risks and uncertainties that could affect our actual results, please see the Risk Factors, Business and Management's Discussion and Analysis of Financial Condition and Results of Operations section in our annual report on Form 10-K filed on March 16, 2026, our most recent press release on Form 8-K and other filings with the SEC. We caution against reliance on any forward-looking statements made today, and we disclaim any obligation to update any forward-looking statements, except as required by law. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided in today's earnings release available on the IR section of our website. These non-GAAP measures are not intended to be a substitute for GAAP results. Unless otherwise stated, we will refer to our financial results on a non-GAAP basis. Additionally, unless otherwise stated, all discussions today refer to our results from continuing operations, and all comparisons discussed today for the second quarter of fiscal 2026 are against the same period a year ago. Please note that a supplemental slide deck outlining selected operating metrics is available on the IR section of our website. Following our prepared remarks, Mike and Stewart will take your questions. Please limit yourself to one question and one follow-up question. And with that, I'll turn the call over to Mike. Michael Creedon: Thanks, Daniel, and good morning, everyone. I want to start by recognizing the more than 150,000 associates across Dollar Tree, whose commitment to our customers drives everything we do. They're creating a more relevant shopping experience through a better assortment, better-run stores, more consistent execution and a customer-first mindset that was reflected in our results this quarter. The second quarter represented another period of progress for Dollar Tree. Improved execution across the business drove financial results above the high end of our outlook range. We're building a stronger business by investing and strengthening the value, convenience and discovery we provide our customers, and the quarter's results reflect those efforts. The Dollar Tree team delivered robust top- and bottom-line results. Net sales growth increased 7% to $4.9 billion. Comp store sales growth increased 3.7%, exceeding our expectations. Customer traffic was positive 0.4%, while average ticket increased 3.3%. Diluted earnings per share were $2.70. That includes $1.31 from the combined net impact of tariff refunds, reinvestments and certain duties on aluminum pans and paper plates. Beyond these discrete impacts, the underlying business continues to strengthen. We are driving a better assortment in more and better-run stores and speaking to our customers in ways we never have before. While it's still early, the customer response and performance we're seeing gives us confidence in these initiatives and in the long-term opportunity ahead. Improving the fundamentals of a nearly 9,500 small-box retail business takes time. It starts with getting the basic blocking and tackling right. We are running cleaner, brighter and better-stocked stores. We're encouraged that those everyday operational improvements are becoming more visible in both our customer metrics and financial results. We're pleased with our performance this quarter. We delivered some of our most compelling comp results in several years, with positive traffic earlier than we expected and strong comp growth on top of the 6.5% comp we delivered in the second quarter last year. That performance is a strong indication that the strategies we've put in place are gaining traction and that we're building real momentum in the business. Last year, we outlined strategies for reaccelerating traffic and top line growth. The sequential traffic improvement helped drive our best 2-year comp stack since 2023. We're also encouraged by traffic trends that strengthened on both a 1-year and 2-year basis as we move throughout the quarter. We believe those trends speak to the underlying momentum in the business and the progress we are making in driving more consistent, sustainable top line growth. We achieved this performance by staying focused on the fundamentals and executing against the priorities we outlined earlier this year. I want to remind you of a few of those priorities and the progress we're making against them. First, we leaned into those categories and price points where customers are responding most positively. We are enhancing our assortment accordingly so that it is broader and appeals to a wider spectrum of income levels. It's the combination of a compelling opening price point, deep value, greater choice, trusted brands and new categories that makes the Dollar Tree value proposition so powerful, and that brings our customers back to the store. Multi-price penetration increased approximately 400 basis points year-over-year to 17% of total sales. We are bringing more excitement, discovery, relevance and choice to the shopping experience while maintaining the value that has always defined Dollar Tree. When you combine a more relevant assortment with a cleaner, better-run store, the customer's response is even greater. That is reflected in the strengthening traffic trends we saw during the quarter and gives us confidence that the actions we are taking are resonating with shoppers. Second, we continued strengthening our marketing capabilities and customer outreach. We doubled down on our value message through our 40th anniversary celebration, reinforcing what has made Dollar Tree special for 4 decades: value, convenience and discovery, while showcasing how the brand is evolving to offer customers even more choice, relevance and that thrill of the hunt. We are bringing the Dollar Tree value proposition to life in new ways and giving customers more reasons to visit our stores more often. Third, we remain focused on operational execution. We continued reinforcing our G.O.L.D. standards and partnering with our field teams to deliver a more consistent customer experience across the fleet. Over the past year, we've made measurable progress in elevating the shopping experience across our stores. At Investor Day last October, we shared that approximately half of our stores were in the opportunity for improvement category, meaning that they fell below our standards. Today, that number is about 1/3 of the fleet, reflecting the significant work our operators have done to improve execution, store conditions and consistency. But we're not satisfied with that progress. As our stores improve, we are continuing to raise the bar and make our standards more rigorous. We're seeing that improvement reflected not only in our internal measures, but also in improving customer sentiment around the shopping experience. There is still more work to do, but we are holding ourselves to a higher standard and building a more consistent experience across the fleet. While we still have opportunities to improve stores that remain below our standards, we believe the larger value creation opportunity is in sustaining the gains we've made and continuing to raise the level of execution across the fleet. The next phase is about making those improvements durable and repeatable. We are embedding stronger operating disciplines across the organization so that better execution becomes the standard, not the exception. Over time, we believe that will translate into a more productive store base, a better and more consistent customer experience and stronger financial performance. We strengthened key areas, including in-stock levels, shoppability, store recovery and store-level planning. When stores are well run, they're easier to shop, better for our associates and customers and more productive for the business. The same operating disciplines that create a better shopping experience also improve inventory control, merchandise protection and compliance with our standards. And this shows up in our shrink statistics. Shrink was favorable during the quarter and contributed to our improvement in profitability. Finally, we continue to improve the shopping experience through targeted store refreshes and renovations designed to make our stores cleaner, brighter and easier to shop. These updates help ensure the shopping environment better reflects the strength of the Dollar Tree brand. While it is still early and we are continuing to evaluate the results and refine our approach, we see an attractive opportunity to strengthen the existing fleet and improve the customer experience over time. Let's turn now to the macro. The consumer environment remains dynamic. Customers continue managing household budgets carefully, shopping with purpose and prioritizing value and affordability. Our data shows we grew sales across all income cohorts. Households we serve were up nicely year-over-year with gains skewing to the middle and higher-income households. Comp strength was broad-based across the assortment, with personal care and toys notable outperformers. Discretionary performed well, and consumables delivered exceptional comp growth. A couple of points are worth highlighting. First, the inflationary backdrop continues to pressure all household budgets, particularly for lower-income consumers. As our customers look for ways to stretch their dollars, they are increasingly turning to Dollar Tree for everyday essentials at compelling opening price points and pack sizes that help them manage their budgets. At the same time, our value and convenience and the breadth of our assortment is resonating across all income cohorts. Second, we were pleased with discretionary performance despite pockets of helium shortages across our store fleet, which created a modest headwind during the quarter. We estimate helium-related in-stock challenges reduced total sales by approximately $15 million or about 30 basis points of comp. We continue to work closely with our vendors to understand the expected recovery of supply. Against that backdrop, the performance of discretionary reinforces our confidence in the broader strength we are seeing across the assortment. Let me turn to tariffs and the tariff refunds we received during the quarter. We received approximately $383 million, giving us a meaningful opportunity to reinvest in the business and further strengthen our value proposition for our customers. We are putting those funds to work in areas where we believe they can have the greatest and most lasting impact. We are focusing those dollars on targeted pricing strategies, marketing, store operations and store conditions, areas that can benefit our customers today while strengthening the business for the long term. Additionally, we are closely monitoring the competitive environment and our relative values in the marketplace. Dollar Tree is committed to delivering outstanding value, convenience and discovery at all times for our customers. Stepping back, we are pleased with our second quarter performance. Comp sales exceeded the high end of our outlook, traffic improved, our assortment gained traction, store execution strengthened, and our teams delivered better results across our supply chain. We believe our investments in merchandising, pricing, marketing and store execution have strengthened customer relationships and improved the long-term earnings power of the business. Across these areas, we remain focused on delivering what we believe matters most to customers, exceptional value, greater convenience and the sense of discovery that has always differentiated Dollar Tree. Those priorities continue to guide our merchandising, pricing and operational decisions, and we believe they position us well to deepen customer loyalty. And we are investing our tariff proceeds in a way that is consistent with that philosophy. As we look ahead, our priorities remain unchanged: better serve and engage with our customers, execute more consistently, allocate capital with discipline and build a stronger Dollar Tree positioned to deliver sustainable, profitable growth over the long term. We are engaging with and learning from our customers in new ways and using those insights to inform how we evolve the business. We're encouraged by the progress we've made, but we also recognize there is more work ahead. In closing, we are navigating a highly uncertain macro environment. As we've said in the past, Dollar Tree is built for times like this. Our strategies are unlocking a better assortment and better-run stores while engaging with our customers in more relevant and compelling ways. We look forward to building on our strong operating momentum in the second half of the year. And finally, I'm excited to share that as we mark Dollar Tree's 40th anniversary, we're committing $40 million through our Dollar Tree's Impact Fund to support local organizations that make a meaningful difference in people's lives. Reinvesting our tariff refunds in these communities will help expand access to essentials, create opportunities and strengthen the communities we serve. With that, I'll turn the call over to Stewart to discuss the financial results and outlook in more detail. Stewart Glendinning: Thanks, Mike, and good morning, everyone. In the second quarter, we saw continued improvement in the underlying financial performance of the business. Second quarter adjusted diluted earnings per share was $2.70, of which $1.31 was attributable to the combined impact of tariff refunds, tariff refund reinvestments and offsetting certain duties. Adjusted EPS is well ahead of our outlook range. Before reviewing our financial results further, I would like to provide an overview of the tariff refunds. Given the impact of tariff refunds and our related reinvestments on the P&L, we think it's important to provide additional context on what we know today, recognizing the timing and magnitude of these items could impact our reported results. During the second quarter, we received $383 million of tariff refund proceeds. The benefit to gross profit and other income was $369 million and $14 million, respectively. Additionally, gross profit was negatively impacted by $13 million of certain duties. In the quarter, we reinvested $37 million of those proceeds, including $22 million in cost of sales and $15 million in SG&A. As Mike described earlier, these investments were targeted at discrete customer-facing and operational initiatives, such as our 40th anniversary celebration, marketing and store conditions, all of which are designed to enhance value, convenience and discovery for our customers. Now let me walk you through the second quarter financial details and then discuss our updated outlook. Net sales increased 7% to $4.9 billion, driven by a 3.7% increase in comparable store sales and a 3.3% contribution from net new store growth. Comps were driven by a 3.3% increase in average ticket on the back of last year's pricing actions and higher multi-price penetration. Traffic increased 0.4%, a sequential improvement relative to the Q1 trend. By category, consumables delivered a 5.8% comp, while discretionary delivered 1.6%. As Mike mentioned, category performance was broad-based, and we overcame an estimated $15 million sales headwind from supply constraints in helium. Gross margin expanded 850 basis points to 42.9% and included a 680 basis point benefit related to the net impact of tariff refunds, reinvestments and certain duties. Gross margin expansion was driven by tariff refunds, lower tariff rates, favorable shrink results and occupancy leverage, partially offset by reinvestments primarily related to our 40th anniversary celebration, certain duties and a mix to lower-margin consumables. As Mike mentioned, our shrink performance remained favorable during the quarter and reflects adjustments to the overall enterprise-wide results from our most recent counts. Moving down the P&L. Total SG&A, inclusive of TSA income, levered 50 basis points and included a 30 basis point impact from tariff refund reinvestments. The improvement in total SG&A rate, inclusive of TSA income, was primarily driven by payroll, partially offset by higher marketing and depreciation costs. Adjusted operating margin expanded 890 basis points to 14.1% and included a 650 basis point net benefit related to tariff refunds, reinvestments and certain duties. Below the operating line, net interest expense was slightly favorable, and the effective tax rate was in line with our expectations. Turning to the balance sheet. Inventory declined 9% versus the prior year, while sales increased 7%, resulting in a favorable inventory to sales spread. We continue to manage inventory tightly, which supports fresher assortments for our customers, working capital efficiency and stronger free cash flow generation. We ended the quarter with $1.06 billion in cash and no commercial paper outstanding. We generated $922 million in cash from operations and invested $246 million in capital expenditures, resulting in free cash flow of $675 million. During the quarter, we repurchased 5.6 million shares for $605 million. Looking back over the last 12 months, we've reduced our share count by approximately 8% and returned over $1.8 billion to investors through share repurchases. As you look ahead, I'd like to walk you through our outlook for the remainder of the year. There are a number of moving parts, which are important to understand as you look at the business going forward. These include the tariff refunds and their partial reinvestment, the ongoing tariffs following the recent rate adjustments and the impact of ongoing fuel costs. Let me share the current assumptions and expected impact on the business. As we shared earlier in the call, the full year will include $383 million of tariff refunds received in Q2. We're not assuming additional refunds. Offsetting these refunds, we currently anticipate reinvestment of approximately $210 million. As it relates to tariff rates, on our Q1 call, I shared that we expected the tariff rates to return to their previous levels. The newly established rates have moved higher, but are now lower than what we had assumed. With respect to fuel, the outlook for fuel rates is elevated relative to when we last spoke in May and therefore, an incremental headwind. Turning to our updated outlook for the year. We expect net sales in the range of $20.5 billion to $20.7 billion, reflecting comparable sales growth of 3% to 4%. We expect adjusted corporate SG&A of $515 million to $535 million, including our $40 million charitable contribution. We now expect TSA income of $65 million, or $5 million lower than we previously assumed. This is primarily the result of the timing of various TSAs rolling off. With respect to net interest expense, we now expect $70 million, or $15 million lower than we previously assumed. This reflects a higher average cash balance and higher interest income. Given the second quarter performance, updated tariff regime and net tariff refund benefit, updated TSA income and net interest expense assumption, we now expect adjusted diluted earnings per share in the range of $7.70 to $8.05, including an approximately $0.60 benefit related to the net impact of tariff refunds. Please note, this outlook incorporates an outstanding share count of 191 million shares, which reflects share repurchases through today's date. Turning to the third quarter. We expect net sales in the range of $5 billion to $5.1 billion, reflecting comparable store sales growth of 3% to 4%. Adjusted diluted earnings per share are expected to be in the range of $0.80 to $0.95, including a negative impact of approximately $0.50 related to tariff refund reinvestments. In closing, we delivered a strong second quarter and continue to execute against our strategic priorities. Our team's focus, operational discipline and improving business performance position us well for the balance of the year as we work to generate consistent, profitable growth and create long-term value for our shareholders. With that, I'll turn the call back over to Mike. Michael Creedon: Thanks, Stewart. As we step back from the quarter, what gives us confidence is not any single metric or onetime event. It's that we're seeing progress across every area of the business. Customer engagement is improving. Merchandising is becoming more agile. Operational execution continues to strengthen, and the investments we've made over the past year are beginning to reinforce one another. While we recognize that there's still work ahead, we believe Dollar Tree is becoming a stronger, more competitive retailer with a greater ability to deliver sustainable, profitable growth over the long term. With that, we're happy to take your questions. Operator: [Operator Instructions] Our first question today is coming from Matthew Boss from JPMorgan. Matthew Boss: Congrats on a nice quarter. Michael Creedon: Thanks, Matt. Matthew Boss: So Mike, can you elaborate on the cadence of the comp trend you saw in the quarter? Traffic turned positive a quarter earlier than your plan 3 months ago. So can you talk to drivers of that outperformance and impact from the 40th anniversary $1 price points? And lastly, can you share where your comp stands quarter-to-date today? Michael Creedon: Sure, Matt. Thanks. First of all, let me start by saying the team did a fantastic job in Q2. If we rewind the clock to the beginning of the year, we had the right strategy given the setup, and we were confident traffic would turn positive much quicker than it did with Break the Dollar. What we saw in Q2 is proof point that a better assortment in better-run stores while talking to our customers in ways we never had before really drives the business. And traffic was the headline in Q2. The comp strengthened as the quarter progressed, and traffic improved sequentially and ultimately turned positive. The most encouraging aspect of the performance was that it wasn't driven by any one category or one event, but we saw broad-based improvement across the business, and that gives us a ton of confidence in the strength of the underlying trend and the underlying business. As I mentioned in my script, not only did we see traffic trends get stronger by month, the 2-year traffic trend also strengthened. So relative to our previous expectations of positive traffic in the back half, we're running about a quarter early. And when I step back, I really like what I see. I like that the strategies we've laid out are working. On the 40th anniversary $1 price points, I think it's important to note that these are really small in scale. For those of you, and I know you do, shop our stores, it's a handful of rotating SKUs and endcaps. And when we look at the data, we definitely think the 40th brought some excitement, some newness, there's a halo that goes with that, but wasn't really a key driver of the comp. On quarter-to-date trends, I don't typically comment on that. But what I would say is that as we put our outlook together, we incorporate everything we know today. And I'm really encouraged by the momentum we continue to see in the business. The team will stay focused on execution and delivering value, making sure we're convenient with great checkout and that thrill-of-the-hunt discovery that Dollar Tree is known for. Matthew Boss: Great. And then, Stewart, a lot of moving parts on margins this quarter. Excluding the net tariff impact, can you walk through what drove the underlying earnings beat relative to your outlook that you shared back in May? Stewart Glendinning: Thanks, Matt. Yes, look, lots of moving parts. There is a great deal of complexity. We're going to try to make that simple. Look, the short answer to the question here is that ignoring the net tariffs, the benefit of those tariffs, we sold more than we expected, and we did that at better margins. So that's the good news. On sales, the 3.7% comp was above the high end of the Q2 outlook, and that just -- that drove additional gross margin dollars, a positive. But the more meaningful driver of our performance was in our margin delivery. And relative to -- if you look back at our Q2 outlook, we had 3 main areas of gross margin favorability: shrink, freight and fixed costs. On shrink, as we highlighted in the prepared remarks, we continue to run better stores, and that's showing up in favorable inventory counts. Shrink was much better than last year and even better than we expected. Shrink also, by the way, benefited from a cumulative adjustment to the reserve, which provided a benefit in the quarter. And just to help with that, the split here is about 2/3 from the inventory results and about 1/3 from the reserve adjustment. Freight was modestly better than we assumed, and that was mainly because we had better-than-expected fuel rates. But the higher sales comp actually allowed us to drive leverage on our fixed costs, which included occupancy and distribution costs. And then on SG&A, since we generated a higher comp, we also generated higher fixed-cost leverage on that SG&A. So we had better sales, we had better gross margin, and we had better operating margin. And I want to point out also that the share count did not have any meaningful impact on the results that I've just spoken to. Operator: Next question is coming from Seth Sigman from Barclays. Seth Sigman: Nice quarter. It looks like the new high end of your EPS outlook, the $8.05 or I guess it's $7.45 ex the net tariff refunds, it mostly just flows through the Q2 beat and the lower share count. I just want to make sure that's right. And then related to that, your prior outlook embedded a higher tariff rate versus the current 12.5% that you mentioned. Where is that upside from lower tariff rates? How is that flowing through? Stewart Glendinning: Stewart here. A good question. So first of all, you're correct, we did pass through the beat and the benefits of the lower share count in our outlook despite the current market volatility and inflation. And if you strip out the net tariff impact of the tariffs, which was $1.31 in the quarter, you get to $1.39 for underlying EPS in the second quarter. And that, of course, is well ahead of the $1 to $1.15 outlook. And the way I calculate it is if you take the $0.24 beat at the high point, and I'm using the high point because we shrunk the range, add about $0.11 of benefit to that $0.24 from the lower share count for the year and then add another $0.04 for the net benefit of lower TSA with the positive impact from lower interest expense, and you get to about a $0.39 benefit coming out of Q2. And since last quarter, the high point of our outlook was $7.10, you take that $0.39, add it to the $7.10 and then you take the net full year benefit of $0.60 for tariffs, and you get right up against the high point of the EPS outlook. So I know there's a lot in there, but that's how you do the math. More importantly, let me address just the tariffs. I'll remind you that for the back part of the year, we had assumed a 20% tariff rate when we reported back in May, that is what the administration was telling us. And as you know, the tariff rates now are lower, somewhere around 12.5%. So we get some benefit from that lower tariff rate in the back half of the year. But there are 2 offsetting factors in cost of sales, which absorb that benefit. First, we are anticipating that the sales growth in the back half skews a little bit higher in consumables. And while that is really a great positive outcome from a traffic and customer relevance standpoint, that higher consumables will drive a slightly lower margin mix. And so the mix -- some of that mix dynamic is absorbing tariff benefits. More powerfully, we've really been focused in the back half on protecting value for the customer. And so while tariff rates have come down, we're also navigating some higher inflation and on portions of our assortment. And we're seeing some pressure in supply chain, of course, because of fuel. So rather than passing those costs on to the customer, we've taken advantage of the fact that we're getting that lower tariff rate in and that tariff rate is absorbing inflation and helping us to maintain value across key categories. We think that's helping our traffic. And of course, we think that's also driving market share gains. So looking at this, I think we've got the right balance between driving the near-term results and strengthening the business. And the good news, I mean, this is really good news, is that our outlook has not included the tariff refunds to offset any of the current inflation. We're taking those higher costs in our run rate, and we're offsetting that higher volatility. So again, I know there's a lot there in the financials this quarter, but hopefully, that lays that out to you. Seth Sigman: Okay. Yes, that's very helpful. I did want to follow up on the tariff refunds, and perhaps you can give us a little bit more color on how you're deploying those funds? And what type of return are you assuming in this guidance for the spending of that? And if there's any context on how that's already started to play out as you start to deploy that? Michael Creedon: Yes, sure. Seth, I'll start, and then, Stewart, if you want to jump in on the returns. As we talked about in the script, we're thinking about tariff refunds as a way to really enhance our strategy. What it gives us is the opportunity to take the initiatives we've laid out and accelerate them. We also use a small portion of the refunds tactically to fund our 40th anniversary $1 price point strategy, which, as I mentioned, created a ton of buzz and excitement for our customers, really supports that thrill of the hunt. The investments are focused, as we all are, on enhancing value, convenience and discovery. So that includes improving our assortment with incredible values, making our stores easier to shop by upgrading in-store signage and then the marketing piece of it, where we're talking to our customers in ways we really never have before and scaling those marketing and digital capabilities. These are all areas that we believe can really increase customer engagement and accelerate our traffic flywheel. The refunds were significant. We're trying to be as thoughtful as we can about how to deploy them. So the investments today provide a lasting return. And Stewart, if you want to touch on those returns? Stewart Glendinning: Yes. Thanks, Mike. Look, just a couple of quick points. We really did not bake in any real return in the incremental spend. And there were 2 reasons for that. First, we're in an environment where many retailers are reinvesting back in price, and we want to remain competitive. And so all boats may end up in the same space. Second, a number of the investments we're actually making are in areas, particularly in SG&A, where we're talking about store standards or where we're talking about messaging. These are places that are going to help to build momentum in the business. And you wouldn't ordinarily expect to see a sudden rush of benefit in. But the way we've looked at those is to try to make sure that these are costs that are going to have lasting benefit, but that are not lasting in terms of expense. So as Mike said, we're using this as an opportunity to accelerate and enhance the investments we are making in our business to drive initiatives across our stores. There could be some upside in this. But I think for the moment, it's a better approach to saying that we're going to be cautious in the way that we estimate our outcomes. Operator: Next question is coming from Rupesh Parikh from Oppenheimer. Rupesh Parikh: And also, congrats on a nice quarter. So on store standards, you mentioned that about 1/3 of stores are not meeting your internal benchmarks, down from about half last October. How should we think about the opportunity from here to not only maintain those standards, but improve them? Michael Creedon: Yes, Rupesh, thank you. At Investor Day last year, this was a critical point that we made. We were really clear that when you improve store standards, you improve the entire foundation of the company. And it's the transformation that unlocks the full potential of this business. We knew we had meaningful opportunity across the fleet, and we laid out a very disciplined approach to address it. We've got a chart in the investor slide deck that shows what this team has accomplished so far. And so I want to make a few points on this. First, the progress we've made is encouraging. But we certainly don't view getting from roughly half the chain to about 1/3 of the stores from the opportunity bucket up as crossing the finish line. We view this as evidence that what we're doing is working and gaining traction. So if you would think about this, early on, a lot of your efforts are just focused on addressing the most visible opportunities, and we've made meaningful progress there. But there is still a significant opportunity to elevate the standards across the entire fleet. Even many of our better-performing stores have room to improve, whether that's merch execution or in-stock levels, recovery, just the overall shopping experience. And those incremental improvements when you're talking about 9,500 stores really matters. It's not just about going from an opportunity store to a good store. We want to go from good to great and great to G.O.L.D. We want to raise the bar on the entire fleet. And when you do that, that's the difference maker for Dollar Tree. And just the other point I'd make is I think a lot of retailers can make progress, they can get focused and make short-term progress. The key to all this and the way we've built it is that we're going to sustain these elevated standards. That's the harder challenge. When you look at G.O.L.D. and our G.O.L.D. standards, we know where we want to get our stores. We know where we want to keep our stores, and our culture of accountability around execution is what gives us confidence that we'll get there. Ultimately, you run better stores, you give a better customer experience, that drives traffic, sales and productivity over time. The positive traffic trends we saw this quarter give us confidence that customers are noticing the improvements. And with a long runway to go, it gives us confidence in what we're doing in our future. I'm very passionate about this point. Rupesh Parikh: Great. Then, I have a quick follow-up question for Stewart. So in terms of the updated outlook, can you help us think through some of the puts and takes on the gross margin and SG&A line for Q3 and Q4? It would be helpful if you can provide any color, mix impact, freight fuel, tariffs and shrink as well. Stewart Glendinning: Yes. Thanks, Rupesh. You said a quick question. There's a lot here. So I'm not sure it will be a quick answer, but let me unpack this. And I really want to take some time to talk about the tariffs because -- we've had a great quarter. We're delivering a little bit faster. And we -- I don't want to confuse the reinvestment with really the underlying performance of the business, which is good. So let me take this apart here. We spent a lot of time trying to unpack the tariffs so that there's transparency, and you can see the business that sits underneath that. And if you look at the supplemental deck, we laid out the full year in that deck so that you could understand what the tariff impacts are, and you can separate them from what I'm saying about the rest of the business. So let me just take you through the items, starting with the refunds, the reinvestment and the duties, you get a picture of that. And then I'll come and I'll talk about the gross margin and the SG&A and give you color on some of the other items that you asked about. So when I talked about the prepared remarks, we had received about $369 million of refund in Q2, and that benefited gross margin in Q2. And for the full year, we currently expect to reinvest approximately $210 million. So you get a big benefit in Q2, and you get the expenses coming in the back part of the year. So $210 million that we're going to reinvest for the full year, that's $80 million impacting gross margin and $130 million impacting SG&A. But of the $210 million, you'll recall, maybe as I went past that in the prepared remarks, we reinvested $37 million in Q2. That had $22 million in COGS and $15 million in SG&A. So think about that, the back half then -- I'll just give you the numbers. The back half will have a gross margin impact of $58 million in COGS, in gross margin and $115 million in SG&A. And keep in mind that the last number, the SG&A number, includes the $40 million of charity donation that Mike talked about. So when you combine all these items on an EPS basis, the net benefit is about $0.60 for the year. And that includes, by the way, $14 million or so that I spoke to, a positive income in the $383 million refund. But -- so $0.60 for the full year. So if you now accept that all the tariffs, you put those aside, the color I'm now going to give you completely excludes any of the puts and takes I've just given you on tariffs, we expect -- we said we expected gross margin to be up for the year, and that means up modestly for the year. And that means that there's going to be some pressure in the back half. And specifically, we expect the gross margin to be flattish in Q3, which benefits from cycling last year's inventory write-off. And we expect Q4 that gross margin will be down. Now what drives that? In both quarters, we have higher freight costs driven by higher fuel prices. And we had, last year, you'll recall, in the back half of the year, very low freight prices. So we're cycling some of that. And we have that broad-based inflation that's coming through our merch costs. I think a lot of that is tied probably to fuel, but we're seeing broad-based inflation. There's a lesser impact on the mix shift to consumables. It's mostly driven by the other 2. And so while you get a little bit of benefit from the current lower tariffs, they're helping, but they don't offset the negative impacts of freight and inflation. And when I'm talking about tariffs, I'm not talking about the refunds now. I'm talking about the ongoing tariff rates. So there's a lot here, forgive me. I want to be really clear on the merch costs because if we're talking about these higher freight costs, we're talking about these higher fuel prices, to the extent that those are sticky -- and of course, the market is volatile. To the extent those are sticky, we'll deploy the 5 levers. We've done that repeatedly over the last couple of years. You can see that we know how to manage to the margin. On shrink, of course, we're not expecting the same magnitude in the back half of the year because most of the inventories have been taken. So I think that's the picture on gross margin. Let me go to your last point, which is SG&A. And I'm talking about SG&A inclusive of the TSA income. We said in the past, we're cycling the red-stickering initiatives from last year, and that's about $33 million a quarter. We see several offsets to this benefit, which includes lower TSA income as we wind down the TSA. We've got some higher utility costs, and we've got some higher marketing costs where we've chosen to invest. But the good news on SG&A is we are controlling the controllables in SG&A, and we continue to see opportunity. So there's a lot there. But if I just summarize it by saying I've broken out the tariffs. You will see those higher reinvestments in the back part of the year, which will reduce our EPS in each of the quarters. You should add that back, and that's probably about 2/3, 1/3 just as a rough guide. On the margins, we're managing these higher costs as part of our run rates. I've laid those out for you. And on SG&A, we're in charge of the SG&A items that are controllable. Operator: Our next question is coming from Bobby Griffin from Raymond James. Robert Griffin: Congrats on a good quarter. Mike, I wanted to circle up first on the $1 price points that you referenced. Is that something we should expect on a go-forward basis? And how are you thinking about those items in the context of the multi-price strategy? Anything that would prevent that from being part of the assortment going forward? Michael Creedon: Yes. It's a good question, Bobby. I'll tell you, like our founders, everything we do is designed around delivering value, convenience and discovery for our customers. Those are the principles at the heart of Dollar Tree, and they guide every pricing decision we make. We're pleased with where our multi-price strategy stands today. Multi-price gives us the flexibility to deliver the right item at the right price while always maintaining that compelling value proposition across the store. So the thrill of the hunt can come from finding a $5 hammer or a $3 seasonal item or a $1 pool noodle. What matters is that the customers know they're getting outstanding value no matter what the price point is. So with that context, looking ahead, there's nothing preventing us from maintaining a $1 price point within the assortment. As Stewart said before, we buy to a margin. When we can offer a $1 item and still deliver the value and economics we're looking for, we'll absolutely do that. Ultimately, multi-price is not about moving away from our heritage. It's about giving us more flexibility to drive the value, convenience and discovery that has always been our heritage and will always be our heritage. Robert Griffin: Okay. That's helpful. I appreciate it. And then just quickly as a follow-up, Stewart, on the helium shortages, modest comp headwind here in 2Q. Just how should we think about that in terms of the back half and what's assumed in the guide from that aspect? Michael Creedon: Yes. I'll actually jump in on that. I'm very close to it. I will say that the team has done a great job on the merch side and on the store side, navigating the helium shortage. As we mentioned in our prepared remarks, helium availability reduced sales by about $15 million or 30 basis points of comp during Q2. The impact was concentrated in our party business. Balloons are an important traffic driver for that business. And when customers come in for balloons, they often purchase other items for celebration and events. So the impact definitely extends beyond the balloon sale itself. But what I think is really important is we don't have a demand issue here. The challenge has been the availability of helium across the industry in these pockets where we've seen some challenges, and that's limited our ability to fully meet the demand. So we're working and we've worked closely with our suppliers. We've taken steps to manage through the disruption. Supply remained constrained throughout the quarter. And as we look to the back half of the year, it's still uncertain. And so because of that, we're not assuming a recovery in the near term in our numbers. But we work this constantly. And I think it's important to note that when you take that impact and you step back, we're encouraged by the underlying performance of the business. You look at discretionary despite this helium headwind, broad-based strength across a number of departments and really a strong discretionary on top of a very strong discretionary last year. Robert Griffin: I appreciate the details on both aspects. Best of luck here in the back half. Operator: Next question today is coming from Michael Lasser from UBS. Michael Lasser: Obviously, there's a lot of moving pieces with all that's going on within the margins, especially. So my question is a 2-parter. One is you are pointing out that the gross margin should be down year-over-year in the fourth quarter. Most likely, the investment community is going to extrapolate that into next year as some of these persistent costs linger around. You have made the case that you can use your 5 levers to offset that. Now is there anything different about this environment that we should at least not anticipate the gross margin will be down for a period of time because you do have a lot of competitors who are investing in price and that could constrain your ability to pass along further price increases? Stewart Glendinning: Yes. I mean, Michael, let me pick that up. First of all, I've seen a lot of earnings releases where people are talking about using tariff refunds to offset back half inflation. And I want to point out that's not what we've done here. All the inflation that we've discussed is sort of directly in the run rate. And we wanted to do that because we want you to see what the underlying business looks like. Having said that, as you know, of course, we have very successfully managed volatility these past couple of years using those 5 levers. And we're confident that we can manage to the margin and work to the algorithm that we laid out at our Investor Day. So the picture for the back half of the year is, of course, as painted, but we want to be mindful also that because of the volatility, these things can move around a lot. And so just imagine that we see changes in tariff or more importantly, we see a cessation of hostilities in the Middle East, and we see a dramatic reduction in fuel costs. These could change that inflation picture quite dramatically. And it doesn't make sense for us, given the strategies that we employ and the value we want to drive for our customers, to take any sort of premature and reactive kinds of decisions. We're driving a great result for the year. We've absorbed these kinds of inflations in that great result, and we think it's better to stay the course until we can see very clearly what the result is going to look like and our merchants and our cost base will respond to what we need to drive the right results for next year. Michael Lasser: Okay. And another way of basically asking the same question, so I apologize for that, is you've, at your Investor Day, laid out an algorithm that will generate substantial earnings growth moving forward. Given these inflationary pressures, coupled with the unique investments that you are making this year and the funding sources from those investments, will 2027 be a year, in light of all that, where you think you can generate the algorithm? Or should we, as the outside, be thinking next year is going to be a sub-algorithm year given that you may have to digest some of what happened this year? Michael Creedon: Yes, Michael, we feel confident in our algorithm. We think Q2 was an incredible proof point of that with traffic turning earlier, I think it demonstrates the customer response. We're not giving '27 guidance today, but we feel really good about the initiatives that we outlined at Investor Day, the work we've done. And what you're starting to see is these initiatives build upon each other and work in conjunction with each other. I call it better, better, better. So it's a better assortment in better-run stores and now with better marketing and more to come on that. And so when I look out at the multiyear horizon, I'm excited about what we're doing, and the proof points are telling me we're doing the right things, we need to keep executing and there's much strength ahead. Stewart Glendinning: Yes. The only thing I'd add to that, Michael, is that the sort of pressure you're seeing in the back half, I mean, that inflation driven, I mean, everybody is feeling that. So we're not going to be alone in that. I think what separates us in my mind and why I feel confident about the long-range algorithm is that we're taking the right choices. You're seeing those results in this quarter, and we're giving you the kind of transparency because we have that belief. Operator: Next question is coming from Edward Kelly from Wells Fargo. Edward Kelly: I was hoping that you could maybe unpack the second half a little bit from a comp perspective and what you're thinking there. Obviously, your traffic compare gets a lot easier. Ticket compare is a little bit harder there. Just sort of how you're thinking about sustaining sort of the 2-year on traffic? And then maybe also just additional color on the mix side in discretionary and what you think is causing that softness there. Michael Creedon: Yes, sure. Thanks, Ed. I'll take that. I think as you look at this sustaining, it really goes to the initiatives we've seen. Both -- everything we laid out at Investor Day was designed to drive both traffic and ticket. And while ticket carried the water in the first half of the year, as you lap last year's tariff-related price actions, we know it's ticket. And so what gives me confidence in the second half of the year is, yes, it's going to be skewed towards ticket. But seeing that -- I'm sorry, skewed towards traffic, excuse me -- seeing that traffic come earlier and seeing the positive Q2, and I mentioned we were pleased with the start to Q3, that gives me confidence in that traffic really helping to drive. But as you start to smooth these things out and you look at the long-term algo, all the initiatives we're executing on are designed to drive both. And I think we've got some really good proof points as you look at the first half of the year, and that gives us the confidence that traffic will carry the day in the second half. And that, as we normalize over time, we really get the strength of both ticket and traffic because that's what we're designing it to do. In terms of the mix, my Brockton will come out a little, and I won't apologize for a 1.6% comp in discretionary. When you look at, it's on top of a 6.1% from last year. So -- and the consumables comp was incredible. I said it in the prepared remarks, this wasn't a question of consumable being the story and oh, no on discretionary. This was a story about discretionary being strong and consumables being very strong. And add back in that helium. I mean, when you look at 30 bps, that takes discretionary to a 2% comp in the quarter. So -- and remember, Q2, there's not a lot of Dollar Tree type events in Q2. So give me Halloween, give me Thanksgiving. Let me get to Christmas. And I think that consumables-discretionary mix really is strong for us and is constantly the magic of Dollar Tree. Edward Kelly: Great. And just a follow-up, Stewart. Could you unpack freight for us? Just the incremental headwind, what is sort of fuel surcharge? How we should be thinking about what's going on with the underlying contract rates? There's been some talk about driver shortages. I don't know what type of visibility you have on renewals. Just any help you could provide there? Stewart Glendinning: Yes. Look, I'll just go back. Nothing's really changed from the previous quarters in terms of the composition there. We did enjoy very low, particularly ocean freight rates at the end of last year, which we highlighted in our call. So there's a bit of lapping that. But ignoring that for a second, as we mentioned, we got through all of our -- or most of our renewals, and the base rates were not substantially different from last year. What is different is really this fuel -- the fuel surcharge that's coming through is very, very meaningful. And that's going to continue as long as the fuel prices are elevated. There is an impact from drivers. It's not nearly as much as fuel. Really, fuel is the driver here. I mean, sort of good news, bad news. Nobody wants to see higher fuel prices. But to the extent that we see things settle out in the Middle East, and that those fuel prices can come back pretty quickly, and that will be felt in our freight rates pretty quickly because that's all set up as a surcharge with readjustment time frames that are actually quite short. Operator: Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments. Michael Creedon: Thank you, everyone. We're excited about the quarter. We're excited about the future of Dollar Tree, and we appreciate your time this morning on the call. Thank you. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Dollar Tree (DLTR) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

This story was originally published on Grocery Dive. To receive daily news and insights, subscribe to our free daily Grocery Dive newsletter. Dollar General and Dollar Tree each posted robust year-over-year sales growth in their latest fiscal quarters on Monday, as the retailers both saw customer traffic and average basket sizes increase. Dollar General turned in same-store sales growth of 3.5% during its second quarter of fiscal 2026, while Dollar Tree’s comparable sales for its Q2 were up 3.7%. The discounters saw sales rise at a strong clip during a stretch when traditional supermarkets turned in weak results. Both dollar retailers saw same-store sales increase during a period when their net sales powered ahead. Dollar General’s and Dollar Tree’s results were considerably stronger than the financial performances supermarket chains have turned in recently. Kroger, for example, recorded comparable-store sales that were up just 1% during its most recent quarter, while Albertsons’ comps were off by a similar percentage. Dollar General’s net sales for the quarter were up 5.2% year over year, reaching $11.3 billion. Meanwhile, Dollar Tree — which has fewer than half as many stores as Dollar General — saw a sales increase of 7%, pushing its net sales for the quarter to $4.9 billion. “We are driving a better assortment in more and better-run stores and speaking to our customers in ways we never have before. While it’s still early, the customer response and performance we’re seeing gives us confidence in these initiatives and in the long-term opportunity ahead,” Dollar Tree CEO Michael Creedon said during an earnings call on Thursday. Dollar General saw store traffic rise 2%, and its average basket size rose by 1.5%, CEO Todd Vasos said Thursday during the retailer’s earnings call. “Notably, this marks the fifth consecutive quarter of growth in customer traffic as we continue to build on the momentum in our business with both new and existing customers,” Vasos said. Dollar Tree’s average basket was up over 3%, and it posted a traffic increase of 0.4%. Dollar Tree’s consumable sales growth was especially strong, rising 5.8% compared with the second quarter of fiscal 2025, CFO Stewart Glendinning said. By comparison, sales of discretionary goods rose only 1.6%. Glendinning added that the retailer expects consumables to lead sales growth during the second half of the year, noting that the trend will keep margins somewhat down. Dollar General’s second fiscal quarter ended July 31, while Dollar Tree’s Q2 wrapped up on Aug. 1. Both retailers said they used tariff refunds they received during the quarter to help bring down prices. “We are putting those funds to work in areas where we believe they can have the greatest and most lasting impact,” Glendinning said during Dollar Tree’s earnings call about the $383 million tariff refund it received. “We are focusing those dollars on targeted pricing strategies, marketing, store operations and store conditions, areas that can benefit our customers today while strengthening the business for the long term.” Recommended Reading Kroger’s comp sales underwhelm as Foran focuses on store improvements

Dollar Tree (NasdaqGS:DLTR) reported quarterly earnings that exceeded Wall Street expectations, with results released for its latest second quarter. Net sales and comparable store sales were positive drivers for the quarter, supporting the company’s performance in a pressured retail market. The company raised its full-year adjusted outlook, which signals management confidence in its current operating plan. This kind of earnings surprise is not limited to Dollar Tree, so it can be worth looking at a broader group of stocks that share exposure to similar themes through 12 dividend fortresses. Dollar Tree runs discount retail stores across the US and Canada, which puts it firmly in the value focused corner of consumer retailing, where shoppers often look to stretch budgets. With a market cap of about US$25.4b, its results can offer clues about demand for low priced everyday goods. See which insiders are buying and selling Dollar Tree following this latest news. For Dollar Tree investors, this earnings beat and higher full year outlook lean toward the bull side of the existing Narrative. The results line up with the view that expanded multi price assortments and focused investment in the Dollar Tree brand can support traffic and earnings, even when retail conditions are challenging. Stronger profitability in this quarter also sits against prior concerns about cost pressure and operational complexity, and for now gives more weight to the rewards side of the story than the single highlighted risk around debt. If we take a look at the community Narrative for Dollar Tree, we can see how this news fits into the bigger investment story. The cleanest way to judge whether this positive turn is holding will be the next few quarters of comparable store sales and operating margin. Investors can track how reported comps compare with the guided 3% to 4% range and whether margins stay consistent as tariff refunds fade and costs evolve. A pattern of comps and margins in line with guidance would support the current bull narrative. A break from that pattern would revive the bear concerns. For the full picture including more risks and rewards, check out the complete Dollar Tree analysis. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DLTR. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Dollar Tree, Inc. DLTR posted solid second-quarter fiscal 2026 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Both metrics increased year over year. Quarterly results benefited from solid comparable-store sales growth and improved margins, supported by the net impact of tariff refunds, lower tariff rates, favorable shrink and occupancy leverage. Dollar Tree, Inc. price-consensus-eps-surprise-chart | Dollar Tree, Inc. Quote Dollar Tree’s adjusted earnings per share (EPS) of $1.39, excluding the $1.31 per-share net tariff-refund benefit, rose 80.5% from 77 cents a year ago and beat the $1.13 consensus by 23.0%.Shares of this Zacks Rank #3 (Hold) company have gained 17.5% in the past year compared with the industry’s 10.4% growth. Image Source: Zacks Investment Research Net sales increased 7% year over year to $4.89 billion and surpassed the $4.86 billion consensus by 0.7%. Comparable-store sales advanced 3.7%, driven by a 3.3% increase in average ticket and 0.4% traffic growth. Lower tariff rates, favorable shrink and occupancy leverage also supported profitability.Profitability improved meaningfully as gross profit margin expanded 850 basis points year over year to 42.9%. About 680 basis points of that increase came from the net impact of tariff refunds, while the remaining improvement reflected lower tariff rates, favorable shrink and occupancy leverage, partly offset by sales mix.Selling, general and administrative (SG&A) costs decreased 40 basis points to 29.2% of total revenues. Adjusted Operating income rose 198.7% to $690.1 million, with operating margin expanding 900 basis points to 14.1%. Dollar Tree ended the fiscal first quarter with cash and cash equivalents of $1.1 billion, no borrowings under its credit facilities and no commercial paper outstanding. It had a net long-term debt, excluding the current portion, of $2.93 billion and shareholders’ equity of $3.4 billion as of Aug. 1, 2026.DLTR repurchased 5.6 million shares for $605 million during the quarter. Dollar Tree had $2.5 billion remaining under its share-repurchase authorization. In the second quarter, DLTR opened 75 Dollar Tree stores and closed 21, ending the period with 9,436 locations across the United States and Canada. The company converted or added about 710 stores to its multi-price format, bringing the total to roughly 6,600.Multi-price penetration increased about 400 basis points year over year to 17% of sales. Store standards also improved, with locations rated as "Opportunities" falling to 34% from 52% at the October 2025 Investor Day benchmark, while "Great" stores rose to 27% from 17%. Selling square footage increased 3.4% to 84.0 million square feet. Management increased its fiscal 2026 adjusted EPS outlook to $7.70-$8.05. The updated range includes an approximate 60-cent benefit from the net impact of tariff refunds. Dollar Tree continues to expect net sales of $20.5-$20.7 billion and comparable-store sales growth of 3%-4% for fiscal 2026. The retailer also plans about 400 new store openings and 75 closings for the year, alongside capital expenditures of $1.1-$1.2 billion.For the third quarter of fiscal 2026, the company expects net sales of $5.0-$5.1 billion, supported by comparable-store sales growth of 3%-4%. Adjusted EPS is projected at 80-95 cents. The third-quarter earnings range includes an approximate 50-cent impact from tariff-refund reinvestments. For fiscal 2026, Dollar Tree expects about $275 million, or roughly 130 basis points, of net tariff-refund reinvestment impact on gross margin. Target Corporation TGT offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Target’s current financial-year sales and EPS indicates growth of 4.6% and 37.7%, respectively, from the year-ago reported numbers. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently holds a Zacks Rank #2 (Buy). FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 15.1% and 36.7%, respectively, from the year-ago reported numbers.American Eagle Outfitters, Inc. AEO operates as a multi-brand specialty retailer in the United States and internationally. At present, AEO carries a Zacks Rank of 2.The Zacks Consensus Estimate for AEO’s current fiscal-year sales and earnings indicates growth of 5.7% and 17.3%, respectively, from the year-ago figures. American Eagle delivered a trailing four-quarter earnings surprise of 48.5%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Five Below, Inc. (FIVE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Dollar Tree, Inc.? Here are five stocks we like better. Dollar Tree exceeded expectations in Q2 fiscal 2026: Net sales rose 7% to $4.9 billion, while comparable-store sales increased 3.7% on higher average tickets and improving customer traffic. Tariff refunds significantly boosted profitability: The company received $383 million in refunds, contributing $1.31 to adjusted EPS and lifting gross margin to 42.9%; underlying adjusted EPS excluding tariff effects was $1.39. Management raised focus on investment and shareholder returns: Dollar Tree repurchased $605 million of stock in the quarter and forecasts full-year adjusted EPS of $7.70 to $8.05, including a $0.60 tariff-refund benefit, while continuing to invest in stores, marketing and pricing. Five Below’s Turnaround Is Working—But Has the Stock Run Too Far? Dollar Tree (NASDAQ:DLTR) reported second-quarter fiscal 2026 results that exceeded its outlook, supported by higher comparable sales, improved traffic trends, stronger store execution and a $383 million receipt of tariff refunds. Net sales rose 7% to $4.9 billion during the quarter. Comparable-store sales increased 3.7%, above the company’s expectations, as a 3.3% increase in average ticket combined with a 0.4% increase in customer traffic. CEO Mike Creedon said traffic turned positive earlier than management had anticipated and improved as the quarter progressed. → Quantum Computing Is Raising the Stakes for Cybersecurity: 5 Stocks to Watch Buyback Boom: These 3 Companies Are Betting Billions on Their Own Stocks “The second quarter represented another period of progress for Dollar Tree,” Creedon said. “Improved execution across the business drove financial results above the high end of our outlook range.” Management attributed the sales performance to a broader assortment, greater use of multiple price points, marketing efforts and improvements in store conditions. Multi-price penetration increased about 400 basis points from a year earlier to 17% of total sales. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? Dollar Tree’s Turnaround Is Starting to Take Root Consumables produced a 5.8% comparable-sales increase, while discretionary merchandise generated a 1.6% increase. Creedon said personal care and toys were notable performers, while sales increased across income cohorts, with gains skewing toward middle- and higher-income households. The company estimated that shortages of helium reduced sales by about $15 million, or roughly 30 basis points of comparable-sales growth, during the period. The supply constraint was concentrated in Dollar Tree’s party business and also affected purchases tied to celebrations and events. Management said it is not assuming a near-term recovery in helium supply in its outlook. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding Dollar Tree also continued work on its G.O.L.D. store standards, designed to improve in-stock levels, shopability, store recovery and planning. Creedon said the share of stores categorized as opportunities for improvement has fallen to about one-third of the nearly 9,500-store fleet, from approximately one-half at the company’s investor day last October. While describing the progress as encouraging, Creedon said the company is focused on raising standards across the entire fleet and making improvements durable. He said favorable shrink results during the quarter reflected stronger store operations, inventory control and merchandise protection. Adjusted diluted earnings per share were $2.70, including $1.31 related to the combined effects of tariff refunds, reinvestment of those proceeds and certain duties on aluminum pans and paper plates. Excluding the net tariff-related impact, CFO Stewart Glendinning said underlying adjusted EPS was $1.39, above the company’s prior outlook of $1.00 to $1.15. Dollar Tree received $383 million in tariff refund proceeds during the quarter. Of that amount, $369 million benefited gross profit and $14 million was recorded in other income. Gross profit was also reduced by $13 million of certain duties. The company reinvested $37 million of the proceeds during the second quarter, including $22 million in cost of sales and $15 million in selling, general and administrative expenses. Those investments included its 40th anniversary promotion, marketing initiatives and store-condition improvements. For the full year, Dollar Tree expects to reinvest approximately $210 million of tariff refund proceeds. Management said it did not assume an immediate return from the incremental spending, citing a competitive environment in which retailers are investing in price and the longer-term nature of investments in store standards and customer messaging. Gross margin expanded 850 basis points to 42.9%, including a 680-basis-point benefit from the net effect of tariff refunds, reinvestments and certain duties. Beyond tariffs, Glendinning cited favorable shrink, better-than-expected freight costs and leverage on occupancy and distribution expenses from higher sales. Adjusted operating margin increased 890 basis points to 14.1%. Inventory declined 9% from the prior year while sales rose 7%. The company ended the quarter with $1.06 billion in cash and no commercial paper outstanding. Operating cash flow totaled $922 million, while capital expenditures were $246 million, resulting in free cash flow of $675 million. Dollar Tree repurchased 5.6 million shares for $605 million during the quarter. Over the past 12 months, the company said it has reduced its share count by about 8% and returned more than $1.8 billion to investors through share repurchases. Full-year net sales are expected to range from $20.5 billion to $20.7 billion. Comparable-store sales are projected to increase 3% to 4% for the year. Adjusted diluted EPS is forecast at $7.70 to $8.05, including an estimated $0.60 net benefit from tariff refunds. Third-quarter net sales are expected to be $5.0 billion to $5.1 billion, with comparable-sales growth of 3% to 4%. Third-quarter adjusted diluted EPS is forecast at $0.80 to $0.95, including an approximately $0.50 negative effect from tariff-refund reinvestments. Glendinning said the company expects gross margin to be roughly flat in the third quarter excluding tariff-related items, benefiting from a comparison with last year’s inventory write-off, before declining in the fourth quarter. He cited higher fuel-related freight costs, broad-based merchandise cost inflation and a greater mix of lower-margin consumables. Management said lower ongoing tariff rates than previously assumed provide some benefit in the second half, but that benefit is being absorbed by inflation, elevated fuel costs and efforts to maintain value for customers rather than pass costs through to shoppers. Dollar Tree also said it will commit $40 million through its Dollar Tree Impact Fund to support local organizations as part of its 40th anniversary. Creedon said the company intends to build on its operating momentum in the second half while continuing to invest in assortment, pricing, marketing and store execution. Dollar Tree, Inc is a North American discount retailer that operates a portfolio of value-oriented store banners, primarily Dollar Tree and Family Dollar. The company's stores offer a broad assortment of everyday items at low price points, including household essentials, food and snacks, health and beauty products, cleaning supplies, seasonal and party goods, home décor, and basic apparel. Dollar Tree's merchandising strategy emphasizes high-turnover branded and private-label merchandise tailored to budget-conscious consumers, with Family Dollar complementing the chain by offering a wider range of price points and assortment depth in smaller-format neighborhood locations. Founded in 1986 and headquartered in Chesapeake, Virginia, Dollar Tree has grown through both organic store openings and acquisitions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Dollar Tree Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Positive traffic growth of 0.4% was achieved a full quarter ahead of management's internal projections, signaling that operational improvements are resonating with consumers earlier than anticipated. The 'G.O.L.D.' operational standards initiative reduced the number of underperforming stores from approximately 50% to 33% of the fleet, directly correlating with improved customer sentiment and higher productivity. Multi-price penetration increased 400 basis points to 17% of total sales, providing the merchant team with greater flexibility to maintain value while expanding the assortment into new categories. Consumables delivered exceptional 5.8% comp growth as inflationary pressures led customers across all income cohorts to prioritize everyday essentials and budget-friendly pack sizes. Discretionary performance remained resilient with a 1.6% comp despite a $15 million sales headwind caused by localized helium shortages impacting the high-margin party business. Management attributed the 850 basis point gross margin expansion primarily to $383 million in tariff refunds and favorable shrink results stemming from better inventory control and store-level execution. The company plans to reinvest approximately $210 million of tariff refunds into targeted pricing, marketing, and store conditions to accelerate the 'traffic flywheel' and build long-term brand loyalty. Full-year EPS guidance of $7.70 to $8.05 incorporates a $0.60 net benefit from tariff refunds while absorbing significant headwinds from elevated fuel-related freight costs. Management expects gross margins to face pressure in the second half of the year due to higher fuel surcharges and a continued sales mix shift toward lower-margin consumables. The company is not assuming a near-term recovery in helium supply, maintaining a cautious stance on the party category for the remainder of the fiscal year. Strategic focus for the second half remains on sustaining operational gains and embedding repeatable disciplines to ensure store improvements are durable across the 9,500-store fleet. Received $383 million in tariff refunds during Q2, which provided a significant one-time boost to gross profit and other income. Committed $40 million to the Dollar Tree Impact Fund as a charitable contribution, which is included in the updated corporate SG&A guidance. Shrink results included a favorable cumulative reserve adjustment, with approximately one-third of the benefit coming from the reserve and two-thirds from actual inventory counts. Ongoing macro volatility and broad-based inflation in merchandise costs are being managed via 'five levers' of margin control rather than immediate price increases to customers. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that while the 40th anniversary $1 price points created 'buzz' and a halo effect, they were small in scale and not the primary driver of the comp beat. The traffic turn was attributed to the broader 'better assortment in better-run stores' strategy and improved marketing outreach. Management noted that Q4 gross margin is expected to be down year-over-year as the company laps historically low freight rates and faces current fuel surcharges. They emphasized that tariff refunds are not being used to mask underlying inflation; instead, the company is absorbing higher costs in its run rate to protect customer value. Management confirmed that the $1 price point remains a core part of the heritage and will be maintained whenever the company can deliver the required value and economics. Multi-price is viewed as a tool for flexibility rather than a total departure from the opening price point model. The $15 million headwind was concentrated in balloons, which are critical traffic drivers for the broader party and celebration categories. Management is working closely with vendors but remains conservative in guidance due to industry-wide supply uncertainty.

This article first appeared on GuruFocus. Net Sales: Increased 7% to $4.9 billion. Comparable Store Sales: Increased 3.7%, exceeding expectations. Customer Traffic: Positive 0.4%, a sequential improvement. Average Ticket: Increased 3.3%. Adjusted Diluted EPS: $2.70, including $1.31 from the combined net impact of tariff refunds, reinvestments, and certain duties. Gross Margin: Expanded 850 basis points to 42.9%, including a 680-basis point benefit related to the net impact of tariff refunds, reinvestments, and certain duties. Adjusted Operating Margin: Expanded 890 basis points to 14.1%, including a 650-basis point net benefit related to tariff refunds, reinvestments, and certain duties. Consumables Comp: Delivered a 5.8% comp. Discretionary Comp: Delivered a 1.6% comp. Multi-Price Penetration: Increased approximately 400 basis points year over year to 17% of total sales. Tariff Refunds: Received approximately $383 million in proceeds. Inventory: Declined 9% versus the prior year. Cash from Operations: Generated $922 million. Capital Expenditures: Invested $246 million. Free Cash Flow: $675 million. Share Repurchases: Repurchased 5.6 million shares for $605 million during the quarter. Full-Year Net Sales Outlook: Expected in the range of $20.5 billion to $20.7 billion. Full-Year Adjusted Diluted EPS Outlook: Expected in the range of $7.70 to $8.05. Warning! GuruFocus has detected 4 Warning Sign with DLTR. Is DLTR fairly valued? Test your thesis with our free DCF calculator. Release Date: August 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Dollar Tree Inc (NASDAQ:DLTR) delivered robust Q2 results with net sales up 7% to $4.9 billion and comp sales growth of 3.7%, exceeding expectations. Customer traffic turned positive earlier than expected, with sequential improvement throughout the quarter, indicating strong momentum. The company received $383 million in tariff refunds, providing a significant opportunity to reinvest in the business and enhance value for customers. Store execution improved, with the percentage of stores below standards reduced from about half to one-third of the fleet, and shrink results were favorable. Multi-price penetration increased to 17% of total sales, broadening the assortment and appealing to a wider range of income levels. Dollar Tree Inc (NASDAQ:DLTR) faces ongoing inflationary pressures, particularly on lower-income consumers, which could impact demand. Helium shortages created a modest headwind, reducing total sales by approximately $15 million or 30 basis points of comp in Q2. The company expects higher freight costs and broad-based inflation in the back half of the year, pressuring gross margins. Q3 EPS outlook includes a negative impact of approximately $0.50 related to tariff refund reinvestments, which may weigh on near-term profitability. The company is not assuming additional tariff refunds, and the timing and magnitude of tariff-related items could impact reported results. Q: Can you elaborate on the cadence of comp trends in the quarter, the drivers of the traffic outperformance, and where comps stand quarter-to-date? A: Mike Creedon (CEO): The team delivered a fantastic Q2, with traffic turning positive a quarter earlier than planned. The comp strengthened as the quarter progressed, driven by broad-based improvement across the business rather than any single category or event. The 40th anniversary $1 price points were small in scale and created a halo effect but were not a key driver of the comp. While not providing specific quarter-to-date numbers, the momentum in the business is encouraging and is incorporated into the full-year outlook. Q: Excluding the net tariff impact, what drove the underlying earnings beat relative to your May outlook? A: Stewart Glendinning (CFO): Ignoring the net tariff benefits, the company sold more than expected at better margins. The 3.7% comp exceeded the high end of the outlook, driving additional gross margin dollars. The more meaningful driver was margin delivery, with favorability in three main areas: shrink (which was much better than last year and benefited from a cumulative reserve adjustment), freight (modestly better due to lower fuel rates), and fixed cost leverage from the higher sales comp. Q: Can you unpack the puts and takes on gross margin and SG&A for Q3 and Q4, including mix, freight, fuel, tariffs, and shrink? A: Stewart Glendinning (CFO): Excluding the tariff refunds and reinvestments, gross margin is expected to be up modestly for the year, with pressure in the back half. Q3 gross margin is expected to be flattish, and Q4 is expected to be down, driven by higher freight costs from elevated fuel prices and broad-based inflation in merchandise costs. The mix shift to consumables has a lesser impact. On SG&A, the company is cycling the red stickering initiative benefit from last year, which is offset by lower TSA income, higher utility costs, and higher marketing investments. Q: How are you deploying the $383 million in tariff refunds, and what type of return are you assuming in guidance? A: Mike Creedon (CEO) and Stewart Glendinning (CFO): The refunds are being used to accelerate existing strategies focused on enhancing value, convenience, and discovery. Investments include targeted pricing strategies, marketing, store operations, and store conditions. The company did not bake any real return on the incremental spend into guidance to remain competitive in a market where many retailers are reinvesting in price. The investments are designed to have lasting benefits and build momentum in the business. Q: On store standards, you mentioned about one-third of stores are not meeting internal benchmarks, down from half last October. What is the opportunity from here? A: Mike Creedon (CEO): The progress is encouraging but not the finish line. There is still significant opportunity to elevate standards across the entire fleet, including many better-performing stores. The goal is to move from good to great and great to gold, raising the bar on the entire fleet. The key is sustaining these elevated standards through a culture of accountability, which will drive traffic, sales, and productivity over time. Q: Is the $1 price point something we should expect on a go-forward basis, and how does it fit into the multi-price strategy? A: Mike Creedon (CEO): There is nothing preventing the company from maintaining a dollar price point within the assortment. The multi-price strategy is about flexibility to deliver the right item at the right price while maintaining a compelling value proposition. When the company can offer a dollar item and still deliver the value and economics it seeks, it will do so. Multi-price is not about moving away from the heritage but about driving value, convenience, and discovery. Q: How should we think about the helium shortage impact in the back half, and what is assumed in the guide? A: Mike Creedon (CEO): Helium availability reduced sales by about $15 million or 30 basis points of comp in Q2, concentrated in the party business. The impact extends beyond balloon sales as it affects other celebration items. Supply remains constrained, and the company is not assuming a recovery in the near term in its numbers. Despite this headwind, the underlying discretionary performance was strong. Q: Given the inflationary pressures and unique investments this year, will 2027 be a year where you can generate the algorithm laid out at Investor Day? A: Mike Creedon (CEO) and Stewart Glendinning (CFO): The company feels confident in its algorithm, citing Q2 as a proof point with traffic turning earlier. The initiatives outlined at Investor Day are building upon each other, creating a "better, better, better" effect. While not giving 2027 guidance, the company is excited about the multi-year horizon. The back-half pressure is inflation-driven and affects the entire industry, but the company is taking the right choices and providing transparency because of its belief in the long-range algorithm. Q: Can you unpack the second-half comp perspective, how you're thinking about sustaining traffic, and the mix between consumables and discretionary? A: Mike Creedon (CEO): The second half is expected to be skewed towards traffic as the company laps last year's tariff-related price actions. The positive Q2 traffic and strong start to Q3 give confidence that traffic will carry the day. The discretionary comp of 1.6% was strong on top of a 6.1% comp last year, and consumables were exceptional. Adding back the helium headwind, discretionary comp was around 2%. With events like Halloween and Christmas ahead, the mix between consumables and discretionary is expected to be strong. Q: Can you unpack the freight headwind, including the fuel surcharge and underlying contract rates? A: Stewart Glendinning (CFO): The composition of freight hasn't changed much from previous quarters. The company enjoyed very low ocean freight rates at the end of last year, so there is some lapping. Base rates from renewals were not substantially different from last year. The key difference is the fuel surcharge, which is very meaningful and will continue as long as fuel prices are elevated. Driver shortages have a much smaller impact. If fuel prices settle, the benefit would be felt quickly in freight rates due to short readjustment timeframes. For the complete transcript of the earnings call, please refer to the full earnings call transcript.